ITV hit by coronavirus as travel companies pull back on advertising

Broadcaster reported slow growth, still managing to beat market expectations

Article updated: 5 March 2020 11:00am Author: Helal Miah

836x222_Television_P_D.jpg

  • Revenues grew by 3% to £3.3bn while the adjusted EBITDA fell to £729m, it was nonetheless better than markets had feared
  • It was the broadcaster’s studios and production business leading revenues forwards with that division seeing deliveries of programmes bringing in revenue growth of 9%
  • Advertising revenues continued to take a hit from the general structural changes as a result of a transition to online viewing and streaming services, revenues were down by 1.5%
  • The share price now suggests a dividend yield of around 7.5% and could be seen as a value trap
  • Recommendation: We continue with our cautious view on the stock where we can at best only recommend a Hold for investors willing to accept a medium level of risk

ITV Plc reported a solid set of full year results that were mildly better than expectations. Despite revenues only growing by 3% to £3.3bn and the adjusted EBITDA falling to £729m, it was nonetheless better than markets had feared. Once again it was the broadcaster’s studios and production business leading revenues forwards, seeing deliveries of programmes bringing in revenue growth of 9%. However, advertising revenues continued to take a hit from the general structural changes as a result of a transition to online viewing and streaming services.

Its transformation to a digital broadcaster and content provider continues as it reported a 13% increase in streaming demand and its newly launched BritBox services on track. Dividends were kept at 8p in line with prior guidance.

Despite the full year number coming in better than expected, the shares have still dropped over 8% at the open as management warn of the impact of the Covid-19 virus and advertising revenues. Amid expectations that consumers will put off travelling, travel companies have deferred or cancelled advertising spending with guidance that, for April alone, total advertising revenues could be 10% lower than prior comparisons. This is naturally sapping confidence in a stock that faces the challenges of online rivals and the general weaker conditions in the UK and global economic environment. The share price now suggests a dividend yield of around 7.5% and could be seen as a value trap. We continue with our cautious view on the stock where we recommend a Hold for investors willing to accept a medium level of risk.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Helal Miah portrait photo
Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment. 

See what else we have to say